Kerry Resists as Lawmakers Urge Pressuring China on Iran

By Nicole Gaouette -
Apr 17, 2013

Secretary of State John Kerry
sought to discourage lawmakers from pressuring China for further
cuts in oil imports from Iran as a condition for renewing its
waiver from U.S. economic sanctions on the Islamic Republic.

A U.S. law enacted Dec. 31 requires China and other
countries to show they’ve “significantly reduced” purchases of
Iranian crude or their banks and other entities that finance oil
trade with Iran may be cut off from the U.S. financial system.

The U.S. is pushing China to cooperate with sanctions
designed to persuade Iran to abandon its suspected pursuit of
nuclear weapons. That initiative conflicts with a separate
effort to gain Chinese help in defusing tensions with North
Korea, whose closest ally and largest trading partner is China.

“There’s only one way to break this cycle” of North
Korean belligerence and negotiation, “and that is to partner
with China in an approach that’s completely different to
anything thus far,” Kerry yesterday told the House
Appropriations subcommittee that oversees the State Department
budget.

The Obama administration considers China crucial to ending
the Korean crisis, and Kerry stressed a unified U.S.-China
stance during an April 14 visit to Beijing. North Korea, which
is suspected of cooperating with Iran on nuclear and ballistic-
missile technology, said yesterday that talks would be possible
when it has amassed enough nuclear weapons to deter an attack.

Referring to North Korea’s young leader, Kerry told the
House Foreign Affairs Committee earlier yesterday that “absent
China coming to the table, I think Kim Jong-Un calculates,
literally calculates, ‘I can get away with anything as long as
China doesn’t come to the table.’”

Wider Impact

On Iran, Kerry said that any push to have countries such as
China to further reduce their imports of Iranian oil would
affect Americans, as well.

“There’s a point where these reductions become not only
very difficult for a particular country to go beyond a certain
point, but also where they have an impact on the global price,”
Kerry told the House Foreign Affairs Committee.

“If you want the price to go up here, you can have the
Chinese vying for more somewhere else because they can’t get it
where they’re getting it now,” he warned.

Kerry said that “things are interconnected,” and that if
countries were pushed to make further import cuts, demand would
push prices up, and “you’re going to see some price changes
that may have everybody screaming as the summer comes.”

Some energy specialists dispute that assessment. Citigroup
Inc. (C)’s global head of commodity research, Ed Morse, said supply
is not currently a problem. “It’s my judgment that there’s
plenty of oil around,” Morse said in a telephone interview.

Saudi Commitment

“The Saudis have made a commitment that if anybody wants
incremental supply they’ll provide it, and they’re a supplier to
China,” Morse said. “Oil has just fallen from a prevailing
price of $110 to $100 a barrel, and that’s another sign that
physical markets are extremely well-supplied,” he said.

Representative Ted Deutch, a Florida Democrat, told Kerry
that China’s imports from have risen from 354,000 barrels a day
in February to 415,000 barrels a day in April. Before waiving
sanctions again, “there should be much more done and expected
of the Chinese in terms of real reductions,” Deutsch said.

Energy data compiled by Bloomberg, indicate that China’s
crude oil imports from Iran rose from 309,218 barrels a day in
January to 520,181 barrels a day in February. In December 2012,
China bought 591,883 barrels a day of Iranian crude.

Kerry told Deutch that he would show him statistics that
would demonstrate the import reductions countries such as China
have already made.